Entries Tagged 'Spending Money' ↓

I thought to myself: “What would it take to save up one million dollars?”

I found the CNN Savings Calculator, and plugged in numbers until I saw something realistic for me.

First, I have roughly $19,000 in savings at the moment. Maybe a little more, a little less.

Second, let’s say I save some amount of money every month. That’s reasonable. Hopefully the amount isn’t extraordinarily huge.

Third, I’ll take the default Federal and State rates, because I don’t know what mine actually are. The defaults are 25% and 6%, respectively. No tax-deferred accounts (yet anyway). I took the default “Average annual gain”, which is 9%.

And the years I’ll save? Well, let’s say I want the million dollars in 10 years. Thus, the lone variable: how much I’ll save each month for 10 years. (Note: if you make this 40 years, the amount goes down drastically.)

Answer: $5,450/month 

At that rate:

Yes, it’s pretty high, but it’s not too mind-blowingly crazy. This summer, I interned with Google and earned $5,000/month. If my salary eventually is double that (after graduating from college and so forth), I just have to live on $4,550/month.

Yes, that’s an optimistic view. But at the same time, it might be a bit pessimistic, because I could start my own company and potentially earn even more than $10k/month. At 18 years old, I was grossing nearly $3,000/month for a short time (if I put the work into it). And trust me, I made a lot of stupid decisions back then.

What do you think?

Of course, once you have the million dollars, you have to know how to spend it. As they say, “Money is worthless if you don’t actually live.”

This post inspired by Erica.

Great comment by Christine…

Although I didn’t appreciate it when I was younger, I now realize the tremendously positive influence my parents and especially my grandparents have had on my life and my finances. Heavily impacted by the Great Depression, my grandparents inculcated the following values into our bloodstreams at a very early age:

1) 30 year Fixed. Period. If you can’t buy the house with this structure, you can’t afford it. End Of Story.

2) Don’t go into debt for your living expenses. Live within your means.

3) Save at least 10% of your money every paycheck.

4) Have an emergency fund to provide you with at least a 6 month cushion.

5) Buy the best quality you can afford, take care of it and replace it only when it wears out.

Is this glamorous? No. Do I drive a 7 series leased BMW? No. Do I buy nice things? Absolutely; however, our 401-ks are fully funded, we have 6 months of expenses covered and a growing investment portfolio that will provide for our security later in life…at least until Hillary decides that it isn’t fair that I have so much and confiscates my wealth with her ravenous appetite for taxation and redistributes it to make things fairer for those who “deserve our help”.

via Herb Greenberg, who I just watched on CNBC.